Income Inequality Falling under the Tories

grizzly1911

antrobus wrote: »

Particularly if you take them from the Daily Mirror.:)

I know I couldn't resist when I saw it on the BBC Newspaper review.:p

grizzly1911

Generali wrote: »

It seems that the changes were mostly driven by increases in VAT in 2011.

That gives the lie to the idea that VAT is a regressive tax: in the UK about half of purchases are of zero rated items which means that poor people pay very little VAT as they spend disproportionately on things like food. IIRC, the increase in VAT in 2011 was attacked by left wing media organisations as a tax on the poor. The reality, as shown by this article, is that it is nothing of the sort.

You are right many things like "raw" food are VAT exempt. Less things than you thing are exempt.

If you want to wipe your bum, wash, clean yourself and home you pay VAT. If you buy any food/drink remotely luxurious or in anyway processed you pay VAT. Fuel for the car and energy to heat their homes are subject to VAT.

I appreciate they will save loads by not replacing their flat screen every year but sadly they don't need those to live on.

michaels

grizzly1911 wrote: »

You are right many things like "raw" food are VAT exempt. Less things than you thing are exempt.

If you want to wipe your bum, wash, clean yourself and home you pay VAT. If you buy any food/drink remotely luxurious or in anyway processed you pay VAT. Fuel for the car and energy to heat their homes are subject to VAT.

I appreciate they will save loads by not replacing their flat screen every year but sadly they don't need those to live on.

AFAIK the 5% VAT rate on domestic energy has not changed for more than 20 years but perhaps you know better? Thus the increase in the standard VAT rate from 17.5% to 20% will have had no impact on income distribution with respect to domestic fuel use.

(OT this anomaly is actually all about politics trumping commin sense - less tax on fuel makes it relatively cheaper than alternatives like energy saving measures or even buying more clothes thus is an oncentive to use energy and thus release carbon dioxide rater than making savings)

grizzly1911

michaels wrote: »

AFAIK the VAT rate on domestic energy has not changed for more than 20 years but perhaps you know better?

I know it was just to show what is subject to VAT.

angrypirate

the_flying_pig wrote: »

OK, right.

you make three suggestions here, they're all a bit different.

(1) increasing VAT to 20% - there's no very clear evidence as to whether VAT increases are progressive or regressive. it was always popularly supposed that VAT is regressive, but, well, who knows. what i think we can agree though is that VAT increases are more regressive [tho more lucrative] than some of the alternatives, most obviously top rate income tax increases.

(2) cutting benefits for high earners - fair enough, that had an impact, but these are almost entirely libdem policies that wouldn't have had a prayer of coming in under a pure tory government.

(3) capping salary increases for high paid PS workers - yeah, maybe but...


the Tory mantra about the relationship between their policies and equality, to the very dubious extent that you coudl find a tory who believes that equality is important, would be something along the lines of, oh, i can't begin to imagine, something like 'if you give the poor no help at all, but tell them that if they can somehow defy the odds & become rich, then they'll hardly get taxed at all, then this will incentivise them to work very hard and become more equal'.

of course we're a very, very long way from anything that's at all like this happening.

what we have seen instead is the very short term impact of some very obviously labour & libdem policies... and as i said earlier, the climbdown on the 50% tax rate will almost certainly mean that the 12/13 numbers will show a move back towards being less equal.

another obvious point is that the tories blocked a mansion tax.

So you are basically trying to claim that had the Tories been in power alone, inequality would have increased not decreased?

Lets just flip this on its head - the Tories and Lib Dems in coalition during a financial crisis have done more to close the gap on inequality in 3 years than Labour were able to during there 13 years in power of which 10 of those years were boom years.

Too right that the mansion tax was blocked - and i dont even own a mansion. Why should assets that have been paid for and a tax has already been paid on them (ie stamp duty) be taxed.